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Seeing Is Believing

By Noy Thrupkaew, AlterNet. Posted April 22, 2005.


As a new documentary shows, at Enron, perception was reality. And through the lens of free-market capitalism and deregulation, with the help of multiple shady plots, all that could be seen was piles and piles of money.

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The tale of Enron unreels like an ancient parable -- something out of the Old Testament, perhaps, or maybe a gory Greek tragedy: clever men allowed to rise to impossible heights, and then dashed to the depths for the sin of pride and hubris. Director Alex Gibney knows as much -- he opens his savage dissection of the 2001 energy-company collapse with a shot of the church that stands next to the corporation's glistening, mirrored offices. "Jesus Saves" is written on the church's façade, dwarfed by the Enron building. When men have tried to fashion themselves into gods, the scene seems to point out, divine intervention is the last thing they can expect when they fall.

Based on the 2003 bestseller of the same name by Bethany McLean and Peter Elkind, Enron: The Smartest Guys in the Room is a devilishly entertaining film, tracing the meteoric rise and catastrophic fall of the seventh largest U.S. corporation with meticulous zeal. The company's demise was a financial scandal on an epic scale -- one that relied on the complicity of a huge array of Enron executives, lawyers, financial advisers, banks and perhaps even the White House, the film alleges. The consequences for employees were staggering: 20,000 jobs and two billion dollars in retirement funds and pensions evaporated when Enron went belly-up. Meanwhile, the execs at the top had cashed in their stock options before the company hit bottom -- they now face multi-billion dollar lawsuits from their former employees, many of whom have lost their entire life savings.

Enron does a bang-up job clarifying the imposingly complex schemes and "accounting" behind Enron's spectacular failure. "People perceive [the Enron story] as a story that's about numbers, ... " says McLean in the film, "but in reality it's a story about people."

The film brings those people into sharp relief through interviews with former employees, C-SPAN footage, phone recordings, and, most devastatingly, through internal Enron promotion videos. One such recording -- a comedy skit, no less -- shows former Enron CEO and president Jeffrey Skilling har-har-ing over his new invention, "HFV," or the "hypothetical future value accounting" system. Unfortunately for Enron, the joke was on them. The HFV was nothing other than the company's real-life accounting method -- the mark-to-market system, in which the future profits from deals were recorded the day the agreements were signed. There was little interest afterwards in checking to see if those projected numbers ever matched up with the true earnings. And in nearly every case, they didn't, by millions of dollars.

As the company's accounting system demonstrates, Enron wasn't exactly a reality-based organization. Headed by Skilling, a devotee of The Selfish Gene and a profligate gambler in his youth, the company had an ubermenschian passion for "visionary innovation" and "the newest thinking" and "big ideas." When those big ideas didn't reap big profits, Enron execs devoted their energies to finding shady ways to drum up the funds. They also expended vast amounts of effort towards convincing stock analysts and the general public that Enron could defy economic gravity. The books complied -- through the magic of mark-to-market accounting, the company always posted tremendous gains. At Enron, says one observer in the film, "Perception is the reality." The company seemed to turn the Cartesian declaration of "I think, I am" outwards: I think, therefore it is.

As depicted in Enron, the company's corporate culture was ruthless, a nightmare brew of Ayn Rand and Social Darwinism. Employees were ranked on their work performance by their colleagues on a scale of one to five; a full ten percent of the workforce was required to be slotted in the "five" ranking and fired every year. At the same time the corporation was winnowing the weak from its ranks, Enron was rising high on the puffery of ego and hot air -- the corporation told the survivors that "if we were smart, anything could be accomplished," says Amanda Martin-Brock, a former Enron executive. And so, with the feeling of invincibility particular to those who sail unsinkable ships or tattoo lovers' names onto their bodies, Enron set out to make over the financial world in its own impossible image.


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'Enron: The Smartest Guys in the Room' opens in New York and Houston on April 22.

Noy Thrupkaew is a senior correspondent for The American Prospect.

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View:
ENRON - A DISASTER
Posted by: Grampop on Apr 22, 2005 8:00 AM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
The purpose of a corporation is to turn a profit. Usually the profit is earned for the stockholders while providing benefits to its customers and employees. A win-win situation. When corporate directors neglect providing benefits in the equation we all lose; customers, stockholders, employees, and taxpayers. It would be beneficial to have some corporate board memebers whose job is to represent the interests of employees and the public in corporate decisions.

[« Reply to this comment] [Post a new comment »] [Rate this comment: 1 - 2 - 3 - 4 - 5]

» RE: NRON - A DISASTER Posted by: Iamnotafruittree
» RE: ENRON - A DISASTER Posted by: elmysterio
» RE: NRON - A DISASTER Posted by: Grampop
» RE: NRON - A DISASTER Posted by: Grampop
» RE: NRON - A DISASTER Posted by: elmysterio
The Next Pandemic?
Posted by: monkeywrench on Apr 22, 2005 10:09 AM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
Forget the Flu. What worries me is that the corporate Darwinism and unbridled hubris that destroyed Enron is THE most dangerous communicable disease, a type of contagious schizophrenia, and that most of corporate America, the media, and the White House has come down with it. If it isn't treated – and soon – the epidemic will kill the entire capitalistic organism and the environment it feeds on, the same way that it killed Enron, WorldCom, and other individual hosts. I just hope that we can develop some sort of cultural vaccine before it becomes a world-wide pandemic.

[« Reply to this comment] [Post a new comment »] [Rate this comment: 1 - 2 - 3 - 4 - 5]

» RE: The Next Pandemic? Posted by: elmysterio
EVIL ALMOST ALWAYS PUTS IN THE MASK OF THE GOOD GUY'S
Posted by: WONDERWALEYE on Apr 22, 2005 10:17 AM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
It always has and will continue to the end of time to put a mask on to hide evil. The BIBLE tells us that and to be aware of it corrupting you.

They also have a word for that and it is: HIPOCRITE!!!!!

GOD SAYS: THAT THERE WILL BE A SPECIAL PUNISHMENT FOR THEM!!!

That has lead many away from the TRUTH that is in GOD'S WORD the BIBLE, because they see their mask and figure that is what GOD AND FAITH is all about. So they never take it upon themselves to pick up GOD'S WORD the BIBLE.

We should never forget that money IS the root of all evil, and the one's that make money their god will find it's a crule god that renders no peace and leads you into very dark places.

MAY THE LOVE OF JESUS BE WITH YOU!!!!!
[this has two meanings]

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Personal loss via Enron/Bush
Posted by: qiplayer on Apr 22, 2005 5:32 PM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
I was working as a healthcare provider on a mobile clinic serving the homeless in Los Angeles in 2002. My job was eliminated due to a sudden loss of funding from the state, which was grappling with the "Energy Crisis" at the time, thus beginning a 3 year period of personal financial instability that I am only now beginning to recover from.

I can with reason say Ken Lay, Dick Cheney et al. cost me my job, home, marriage, and health. And I had no direct relationship with Enron. How many other victims of their corruption might there be, at a distance from the company, but with a clear dotted-line connection?

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Total misconception of Ayn Rand's ideas
Posted by: ice on Apr 22, 2005 11:58 PM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
"As depicted in Enron, the company's corporate culture was ruthless, a nightmare brew of Ayn Rand and Social Darwinism. Employees were ranked on their work performance by their colleagues on a scale of one to five; a full ten percent of the workforce was required to be slotted in the "five" ranking and fired every year."

Well, if the author would actually have READ Ayn Rand and not thought his perception only would give him the right idea, he maybe would have had a clue about her philosophy.

In her book Atlas Shrugged it is especially noticed, that a culture of letting colleagues determine the rewardings is highly immoral. Why? Because it is NOT capitalistic but marxist-socialistic behaviour. It was Marx who liked the idea of establishing communes who decide with a majority whatever they want what other people have to do and how they are rewarded. Ayn Rand showed up eloquently in what disaster this would lead.

Therefore, blaming Ayn Rand despite her correct analysis blames only the author himself of not working properly.

By the way, the idea of firing the worst 10% employees every year is not an Enron idea. It was succesfully (!) established decades ago by Jack Welch for General Electric. Right now, I am working for a blue chip company and would appreciate if they would get rid of 10% of their "fat" every year. But unfortunately, after German labor law this ain't possible.

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What was missing......
Posted by: entropyorganizer on May 18, 2005 6:32 AM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
I saw the movie and thought that there were several very important points that were missing. With all the implications of the Bush involvement documented there was no mention that the “Mark-to-Market” accounting was approved by the SEC during the Clinton administration. The “Mark-to-Market” accounting method, as it turns out, was the crucible of the Enron collapse. The movie placed all the blame of the California energy crisis on Enron, when in fact; poor legislation played a larger role. A California lineman told me that the new deregulation laws severed any coordination of power shut-downs for maintenance….ergo, an opportunity for Enron to create artificial demand. Oh, and the movie failed to mention that there were employees that DID ask why…..and were asked to leave.

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